Trump Set to Issue Order on Association Health Plans

Would allow certain groups to buy insurance across state lines

WASHINGTON -- President Trump plans to sign this week, possibly on Thursday, an executive order allowing members of health insurance plans provided by associations to buy policies sold outside their own states, according to media reports.

The idea behind "association heath plans" is that small groups of individuals, such as those with a common profession or interest, could band together and be counted as a large group for health insurance purposes, as long as that is not their sole reason for being.

In late September, Sen. Rand Paul, MD (R-Ky.), speaking on NBC's "Meet the Press," said he was "working with the president on letting people buy across state lines in groups, health care associations ... I think we have some good news that will get millions of people access to inexpensive insurance."

Not a lot is known about the potential executive order, although it appears to mesh traditional proposals for selling insurance across state lines with the concept of association health plans, explained Robert Laszewski, president of Health Policy and Strategy Associates, a consulting firm in Alexandria, Va. It would also allow the sale of short-term health insurance policies -- currently banned under the Affordable Care Act (ACA) -- and order federal agencies to expand their use of health reimbursement accounts, which are pre-tax employer-paid dollars that employees can use to buy health insurance, according to the Wall Street Journal(subscription required).

"What they're apparently trying to do ... is enable individuals to opt out of the individual health insurance market, which is regulated by Obamacare and has all these mandates in it ... and to go into health insurance plans ...[where] they're regulated like an employer with far fewer mandates," Laszewski said in a phone interview.

Laszewski repeatedly stressed that his assumptions are based on "speculative" news reports -- "we're talking about speculation on top of speculation," he said.

Unlike plans sold on the individual market, association health plans wouldn't be required to meet the Affordable Care Act's essential health benefit requirements -- making them potentially 10-20% cheaper, he said. Those figures will remain cloudy until the order is released, he noted.

Douglas Holtz-Eakin, PhD, president of the American Action Forum, a right-leaning think tank in Washington, wasn't convinced that the idea behind the order was to target the essential health benefits or to provide cheaper insurance.

"There's never been any idea that it was an end run on the regulatory structure," he said in a phone interview. "This could easily impose all the [Affordable Care Act] rules."

Asked specifically whether the order might undermine the ACA's ban on charging people with pre-existing conditions more, Holtz-Eakin said he didn't know enough about the order and "how far it pushes things."

As for how the order would affect the current state of the ACA's exchanges, people who receive subsidies to pay for their insurance would likely remain on the exchanges because that would likely continue to be their most affordable option, Laszewski said.

However, among the non-subsidized population, those most likely to buy "stripped down" plans would be those who don't require as comprehensive a set of benefits -- "pull[ing] a lot of these healthy people out of the pool," he said.

Such an approach could split the individual market in two, with sicker people remaining in Obamacare's individual exchanges and healthier people switching to this non-regulated market, he explained.

"It would also tend to insure a lot of non-subsidized people who don't have health insurance today [because it's too expensive]. It would give them an alternative," he said.

Holtz-Eakin views the order as having very little impact. He noted that the ACA already includes provisions allowing the sale of insurance across state lines, but no insurers have been very interested, because it's too difficult to build networks in other states.

"I don't see why creating a new kind of insurer will change things much. The ones we have don't want to sell across state lines. A new kind probably won't want to either," he added.

Selling insurance across state lines is legal now as long as the insurer is licensed to sell policies in the new state. As of early February, six states -- Rhode Island, Wyoming, Georgia, Kentucky, Maine, and Oklahoma -- have signed some version of "cross-border" health insurance bills to encourage such sales, according to the National Conference of State Legislatures.

However, no states have taken steps to actually implement the compacts, according to America's Health Insurance Plans. The National Association of Insurance Commissioners has expressed its opposition to the idea, arguing that it would "make insurance less available, make insurers less accountable, and prevent regulators from assisting consumers in their states."

Michael Cannon, director of health policy studies at the Cato Institute, a libertarian think tank, told MedPage Today the reason insurers aren't clamoring for these reforms is that increased competition would threaten their profits.

On the whole, the order could turn out to be "relatively toothless," said Holtz-Eakin. "It wouldn't be the first time it was done to give the appearance of trying to do something ... Action is better than inaction."

Laszewski said the potential order's effect "is not black and white" because although the approach would give some non-subsidized individuals who can't afford their Obamacare premiums -- who disproportionately vote Republican -- a new option, it also "sabotages" Obamacare, he said.

"It's helping a lot of Trump supporters, who were struggling under Obamacare, at the expense of the overall risk pool in Obamacare," he concluded.

Whether or not it's legal is another question, Laszewski added. "We've had bills in the Congress to do this since the late 90s and they've never passed. How is it that Trump can suddenly legislate through regulation something that can't pass through the Congress?"

Laszewski expects that "blue" states like New York and California to file lawsuits "almost immediately" charging that these regulations are going to undermine their insurance exchanges, and that they aren't legal.

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